Servicing

The value of mortgage servicing rights "materially declined" in the first quarter, according to an analysis by New York-based MIAC.Market prices for most classes of generic servicing assets tracked by MIAC "have continued to erode as a result of another low interest rate environment and prepayment speeds reminiscent of last September," MIAC said in its MSR monthly update. MSRs on conventional 30-year mortgages lost an average of 9% over the quarter, with the average value falling to an average of 2.95 times the servicing fee for the asset. However, in recent weeks MSR values have edged upward as a result of rising interest rates. MIAC is located at http://www.servicing.com on the Internet, and a sample of MIAC's Generic Servicing Asset valuations, updated daily, can also be found on our website by clicking on Servicing News icon to the left.

Northern Trust, Chicago, has announced its appointment by Mortgage Guaranty Insurance Co., Milwaukee, to provide domestic custody services for $5.5 billion in general insurance assets.Northern Trust is a provider of custody, asset administration, and investment management services. The companies can be found on the Web at http://www.northerntrust.com and http://www.mgic.com.

At least four separate securities lawsuits have been filed against subprime residential mortgage lender NovaStar Financial Inc., Kansas City, Mo., in the U.S. District Court for the Western District of Missouri.The actions, filed on behalf of shareholders, charge that head officers and directors artificially inflated the market price of securities throughout the class period, between Oct. 29, 2003, and April 8, 2004. The stock hit a high of $67 per share during that period. The complaint alleges that NovaStar overstated the number of its branches in existence and conducted business in states (such as Nevada) where it didn't have a license. NovaStar has retained the services of Orrick, Herrington & Sutcliffe LLP to defend the company against the suits, which were filed following adverse reaction to recent articles on NovaStar's stock in the news media, the company said.

Four classes of PNC Mortgage Securities Corp. mortgage pass-through certificates have been downgraded by Fitch Ratings.The downgrades were as follows: series 1999-9 group 1, class IB5, from B-minus to CCC; series 1999-9 groups 2, 3, and 4, class CB4, from B to CCC; series 2000-3, class DB3, from BBB to BB (and removed from Rating Watch Negative); and series 2000-3, class DB4, from CCC to CC. Fitch also upgraded nine classes and affirmed the ratings on 41 classes in eight PNC deals. The rating agency attributed the downgrades to loss levels and high delinquencies relative to applicable credit support. Fitch can be found online at http://www.fitchratings.com.

Class F of Salomon Brothers Mortgage Securities VII Inc. mortgage pass-through certificates, series 1996-C1, has been downgraded from B-plus to CCC by Fitch Ratings.Fitch also upgraded one class and affirmed the ratings on four other classes in the deal. The downgrade is due to the deteriorating performance of the Clubhouse Inn loan portfolio, which is secured by five hotel properties, the rating agency said. Fitch can be found online at http://www.fitchratings.com.

Citi has announced the introduction of the Citi Home Rebate Platinum Select MasterCard, featuring a program that turns everyday purchases into rebates to pay down the principal on a mortgage.The company said the program is the first of its kind, and that applicable purchases include everything from gasoline and groceries to mortgage loan application fees and vacation expenses. Gina Doynow, a senior director at Citi, said the program rewards are significant because cardmembers can "build equity in their homes faster, while shortening the length of their mortgage." Citi, a part of Citigroup, can be found on the Web at http://www.citicards.com.

The rating on class A-4 of ABSC Manufactured Housing Contract Resecuritization Trust 2004-OAK1 has been lowered from AA-minus to A by Standard & Poor's Ratings Services and removed from CreditWatch with negative implications.The rating agency also affirmed the ratings on three senior classes in the deal and removed them from CreditWatch. S&P attributed the downgrade to the "continued adverse performance trends" of the underlying securities and the resulting decline in credit enhancement available to support class A-4. Series 2004-OAK1 is a real estate mortgage investment conduit deal consisting of two underlying securities: OMI Trust 2000-B, class A-1, and OMI Trust 2000-C, class A-1. "While each underlying security is currently receiving principal and interest payments, assumptions have been revised regarding cumulative net losses on these securities based on actual performance data and expectations of future trends," S&P said. The rating agency can be found online at http://www.standardandpoors.com.

Three classes of notes issued by SFA Collateralized Asset-Backed Securities I Trust have been downgraded by Fitch Ratings.The downgrades were as follows: class A, from AA-plus to BB; class B-1, from B-minus to CC; and class B-2, from B-minus to CC. The C rating on class C of the deal was affirmed. The transaction, a collateralized debt obligation managed by Structured Finance Advisors Inc., is supported by a diversified portfolio of asset-backed securities, residential mortgage-backed securities, and commercial MBS. Fitch attributed the downgrades to the continued deterioration of the collateral since the last rating action in July 2003. As of March 15, defaulted assets represented 7.98% of the approximately $183.8 million of collateral and eligible investments, the rating agency said. Fitch can be found online at http://www.fitchratings.com.

MERS, the electronic registry for tracking ownership of mortgage servicing rights, is now registering about 50% of new loans that are being originated, MERS president and chief executive officer R. K. Arnold has told MortgageWire.Since its inception, MERS has registered 22 million loans, and today 29 of the 30 largest loan originators are using the system. Mr. Arnold said MERS saves lenders money by eliminating the need to create assignments when loans or servicing rights are sold, and that is having an impact in the market for mortgage assets. "We are seeing, more and more out in the secondary market, a pricing differential between registered and nonregistered loans," Mr. Arnold said.

Five classes of ContiMortgage Corp. home equity loan transactions have been downgraded by Fitch Ratings.The downgrades were as follows: series 1998-2, class B, from BB to B; series 1998-3 group I, class B-I, from B to CCC; series 1998-3 group II, class B-II, from B to CCC; series 1998-4, class B, from B to CCC; and series 1999-3, class B, from B to CCC. In addition, class M-1F of series 1997-2 group I has been placed on Rating Watch Negative, and Fitch affirmed the ratings on 17 other classes from five ContiMortgage deals. The negative rating actions were attributed to the poor performance of the underlying collateral. The rating agency said greater-than-expected losses have "consistently exceeded the amount of available excess interest, resulting in a depletion of overcollateralization." Fitch can be found online at http://www.fitchratings.com.